Data Analytics: Key to Operating a Successful Pharmacy Business and Practice
“Big Data” has become a popular term describing the volume, variety, and need to retrieve and process data that helps meet the demands of a business.
Healthcare presents one of the most complex types of data of any industry because of its privacy rules and federal/state regulations. Yet with the rapid growth of enabling technology tools capturing healthcare data, the volume of available data is increasing. Now organizations are trying to make sense of all of this information and how best to apply it to their business and clinical care offerings.
Challenges to Pharmacy Realizing the Benefits of Data Analytics
Pharmacy collects huge volumes of patient and transaction-based data and keeps it for a minimum of 10 years.
Pharmacy data comes in all types of formats and from various sources including:
- Patient data
- Prescription transaction data
- Supply chain data
- Therapeutic clinical data
- Insurance data
- External marketplace data
This data can be housed in various databases including pharmacy management systems, financial systems, category product systems, and supply chain systems.
Pharmacy’s traditional data retention practices focused on legal and regulatory recordkeeping storage, size of storage, and cost of storage, with limited emphasis on access to or use of the data. Today, we have more cost-efficient storage combined with easier access (i.e., the cloud). Thus, attention is now on how to analyze the data to make it more meaningful and useful.
Typically, simple business analytics were used: applying subsets of the data files for fiscal planning, key performance metric dashboards, gap analysis on key indices, and broad category management of patients, products, and services.
As pharmacy continues to expand its role and provide greater access to a broad spectrum of care, the amount and variety of data will continue to grow exponentially. In addition to locating the sources of data, combining the data, performing analytics, and gaining decision-making guidance, the greater challenge is timely response to marketplace business and patient care demands.
This challenge is further compounded as pharmacy collaborates with healthcare providers, expanding access, retrieval, and use of patient health history beyond just prescription records and employing cross-system data sharing (interoperable electronic healthcare records) between various healthcare providers to manage patients more holistically.
Compiling, analyzing, and formulating decision strategies and operational action plans isn’t that easy to do. There are several questions that should be addressed:
- How do you address large volumes of data?
- Do you store all of the data or only what is relevant and timely?
- Do you analyze it all?
- How do you determine the data elements that make the most sense for business and practice needs?
- How can you use the data to your advantage?
- How can you put these terabytes of data into full context, and will the process take too long for you to get timely results?
Leveraging Big Data
In order to be connected and successful in the marketplace, pharmacy needs to think differently about how to manage Big Data and incorporate it into business and professional practice.
The goal of all business with access to large data collections should be to harness the most relevant data and use it for optimized decision making. To that end, forward-thinking industry leaders are using a multitude of data-driven analytic tools to shine a light on intelligence that can target three key areas with potential to maximize revenue and margin:
- Improving customer engagement:
- Examining acquisition, loyalty, growing market basket size, and frequency of spend
- Understanding and developing programs that address overdeveloped, developed, and underdeveloped therapeutic categories
- Improving medication adherence:
- Aligning with payers to meet CMS Star Ratings expectations
- Reducing abandonment while nurturing patients to assist in their therapy through education, reminder, and medication synchronization to improve refill rates
- Other support strategies that can establish strong bonds to contribute to improved patient health and the “bottom line”
- Optimizing operational efficiency and costs
Examples of the Benefits of Data Analytics
The key to performing data analytics is adopting a platform that can efficiently aggregate, compact, index, and prepare the data for pharmacy business and professional use. Once this platform is in production, here is a small sample of use cases that have been shared with me by our peers in the industry of how pharmacy has leveraged the extraction and use of the data:
- Strategic Planning and Budgeting: Develop yearly strategic plan and roadmap of financial contributions.
- Performance Metrics: Dashboard of internal and external key performance metrics to manage the business.
- Managed Care Reimbursement Profitability: Studies show that many pharmacies write off a significant portion of their reimbursements from insurers and other payers. Mine this data for potential ways to increase reimbursements and boost profitability.
- Pricing and Working Capital Strategy: Analyze millions of Rx SKUs (stock keeping units) to determine optimal prices to maximize both revenue/ profit and use of working capital inventory.
- Legal Compliance: Mine the data and perform desktop audits and analyses to address compliance trends and avoid/mitigate potential business and regulatory risks.
- Shopper Insight: Mine data for insights that drive strategies for customer acquisition, retention, and optimization of best loyalty offerings. Identify best customers who can increase market basket size and frequency of spend.
- Medication Adherence: Mine the data for insight on best programs and practices to improve customer compliance and adherence.
- Value-based Performance Tracking of Patients with Specific Chronic Conditions and/or Medications: Develop actionable performance reports to monitor, track, and trend pharmacy delivery of clinical services to meet payer contract and Star Ratings expectations.
- Operational Optimization and Efficiency: Increase visibility into the accounting/finance of pharmacy and opportunities to address and remediate “leakages in profitability.” Streamline operational processes to control cost and improve efficiency.
Pharmacy as a business and professional practice is being presented with a large opportunity in the years to come. We are positioned to play a significant role partnering with other healthcare providers to increase access and improve the quality of patient care, while contributing towards controlling healthcare spend. Positioned with a strategy, platform, and leveraging best practices to harness the power of data analytics to make it more meaningful and useful, pharmacy can transform this information to help it improve on its financial, clinical, and competitive outcomes.
David J. Fong, PharmD, is president of Dave Fong Rx Consulting, Inc. A former senior retail pharmacy executive for Fortune 100 and Fortune 500 companies, he is recognized as one of the U.S. and Canada’s business and professional healthcare leaders, leveraging his knowledge and experience working with pharmaceutical manufacturers, distributors, retailers, payers, and healthcare technology companies to bring value to the industry and the consumer.
Want to learn more about related topics? Check out these RxPerts Academy features:
You may also like:
Recently, I participated in the annual meeting of one of my favorite organizations: The American Society of Automation in Pharmacy (ASAP). ASAP's mission is to foster ...
An outbreak of coronavirus in Wuhan, China, has captured international attention, killing 82 in China (as of January 27 reports)...
Filter by Type
Sign up to receive the latest news and information!